Degree Name

Doctor of Philosophy


Department of Accountancy


The idea of activity-based costing emerged when people, such as managers and management accountants, thought that the existing cost systems were no longer able to fulfil their needs. Increased competition has required that companies make changes in their technology, in their production process, product design, and in the effectiveness of decisions concerning pricing. The major criticism of existing cost accounting and management control systems is that they are considered unlikely to provide useful infonnation for managing today's manufacturing operations. Conventional systems fail to provide accurate product costs in most manufacturing settings, because they rely heavily on drivers that are attributes of the unit product.

Activity-Based Costing is aimed to address and solves these problems. The factors that led to the emergence of ABC systems imply that implementation of an ABC system requires certain environment to gains its significant benefits. These required circumstances are: high overhead, low direct labour, high diversity and variety products, and high levels of computer technology in manufacturing process. Since the theory was developed, the ABC system has been implemented in these situations. There is no literature or any research experience of implementing an ABC system under different conditions.

This research was undertaken using a single case study in different circumstances as required by the ABC system. The ABC system was prototyped in the site for 3 months. The results show that an ABC system still produces significant gains in this special condition. However, the site also has to pay the cost of implementing if they are willing to implement such a system. The implementation of ABC system also has behavioural impacts that will change the company's working behaviour, and will affect management policy. The gains as well the costs are split between quantitative and qualitative justification.